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Australian Markets Weekly Wrap

Provided by The Australian Investor

Monday 27th August 2001

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Last week, a strong performance from many stocks Friday helped market indices end the week in positive territory. Investors seem to have taken heart from the lack of official data here and in the US, and responses to profit announcements, good and bad, were more muted than they have been for some time. Only time will tell whether this is a balanced assessment of the state of our economy or the exhaustion of markets that seem to have been overreacting to every bit of news.

From the previous Friday's close, the S&P/ASX 200 rose 17.6 points or 0.5 per cent to 3,348 and the All Ordinaries rose 12.8 points or 0.4 per cent to 3,288.2 over the course of last week.

On Monday BHP Billiton announced its annual profit was $US1.53 billion, an increase of 1.5 per cent. It ended the week at $9.32, up 8c.

Australian Gas Light's subsidiary Natural Gas Corporation reported a loss of $301.6 million.

Orogen Minerals made an interim net profit of $US20.27 million, down 27.1 per cent, and ended the week at $1.05, up 3c.

In the US on Monday, leading economic indicators for July reached 0.3 per cent, beating the consensus forecast of a 0.2 per cent rise. The result suggests American economic growth continues, and the results of American research and surveys continue to surprise even the experts.

The American Treasury reported a budget surplus of $US2.5 billion in July, the month the first round of American Federal income tax rebate cheques were sent out.

On Tuesday , OneSteel reported a loss of $28.8 million, and ended the week at OST.

Normandy Mining lost $154.6 million and by the end of the week it had fallen 8.7c to $1.093.

Cochlear made $31.2 million, an increase of 55 per cent. Its shares ended the week at $46.10, up $5.90 or 14.7 per cent.

Australian Magnesium lost $16.9 million for the year and ended the week up 3c at $1.32.

Southcorp increased annual net profit by 4.9 per cent to $215 million and over the week, its shares rose 17c to $7.73.

In the US, the Federal Reserve reduced interest rates again, from 3.75 per cent to 3.5 per cent. Since it starting cutting interest rates, the American central bank has cut rates by three percentage points. While labour markets are weak and productive capacity is under-utilised, lower interest rates should pose no threat of an outbreak of inflation. A further cut in October will depend on the way American consumers use their tax rebate cheques.

On Wednesday , the Commonwealth Bank reported net profit of $2.4 billion, down 11 per cent and its shares fell $1.016 to $30.40 over the course of the week.

Santos reported interim profit of $215.5 million, up 22 per cent, and over the course of the week it rose 16c to $6.44.

CSL reported an annual profit of $78.2 million and made promising comments about its plans. It ended the week at $49.51, up 50.1c.

Boral's net profit was down 9.1 per cent to $153.4 and its shares rose 25c over the course of the week to $3.42.

Perpetual Trustees increased net profit by 36 per cent to almost $55 million and ended the week at $42.70, up 45c.

Publishing and Broadcasting made a loss of $84.6 million and fell 16v to $9.83 from last week's close to this week's

Ecorp lost almost $32 million for the year and ended the week at 41.5c, down 3.5c.

ERG's annual profit was down 83 per cent to $6.1 million and its shares fell 37 c or 37.37 per cent to 62c over the course of the week as private and institutional investors punished it for the lack of any prior warning.

The Federal Government gave its approval for Singtel's takeover of Optus. Its shares ended the week at $3.77, up 13c.

In the US, the Federal Office of Budget and Management lowered its forecasts for the 2001 surplus from $US281 billion to $US158 billion.

General Motors announced its will meet its annual financial targets, putting wind in American investors' sails.

The Semiconductor Equipment and Materials International released data that was interpreted as indicating that demand for chips and capital equipment might have bottomed.

Thursday , AMP reported its interim net profit, which was down 23 per cent at $403 million. Its shares climbed $1.03 or 5.4 per cent over the week to $20.15.

Sons of Gwalia launched a takeover of PacMin. Sons of Gwalia ended the week at $7.405, up 0.5c and PacMin shares jumped as soon as the offer was announced, and by Friday's close, were at $1.29, up 44c or 51.76 per cent.

The Australian Gas Light Company's net profit was down by almost three quarters, and its shares ended the week down 11c at $8.32.

Orbital Engine lost $26.8 million and was punished on Thursday but announced a licensing deal with Delphi on Friday, and ended the week up 19c or 36.54 per cent at 71c.

In the US, the minute of the June meeting of the Federal Open Market Committee were published, and raised concerns that there may by no further interest rate cuts.

New jobless claims increased 8,000 to 393,000 and the number of continuous unemployment claims rose 131,000 to 3.18 million, its highest level in more than eight years. The monthly total fell in July and analysts are predicting it will fall again once the full figure for August is known.

On Friday , Iluka Resources said it had made an annual net profit of $46.1 million and close the day at $4.05, down 0.7c for the week.

Billabong made a net profit of $42 million and ended the week at $6.85, up 40c.

TAB QLD reported a net profit of $20.3 million, down 13.75 per cent, and by Friday's close, its shares were at $2.90, up 5c.

In the US, July new home sales leaped 4.9 per cent to 950,000, beating analysts' forecasts. New home sales are up 7.5 per cent compared to July last year.

Durable goods orders fell 0.6 per cent in July, in line with forecasts and confirming that businesses are still reluctant to invest. If Defence orders are excluded, the fall is one per cent, if transportation is excluded, the fall is 1.4 per cent, and orders for computers and electronics fell 4.4 per cent. The data suggest the decline I the American manufacturing sector is not over yet.

- Aussie Dollar

The Aussie dollar gained more than one cent US over the week - from last Friday's 52.4 US cents it reached 53.43 US cents by 4.00 pm yesterday.

- SPI

The September contract finished the week at 3,351, up 21 points.

- Industrials

The S&P/ASX 200 Industrials index rose 16.3 for the week to 5,808.3.

- Resources

The S&P/ASX Resources index rose 20.2 points over the week to close at 1,420.8.

- Banks

The Bank Index closed the week up 104.5 points at 9,091.6.

Gold

- The Gold Index closed the week down 7.7 points at 781.3

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